Saturday, September 6, 2008

The Decline of the Middle Class Income

Since 1980 when the Reagan Administration moved into Washington and instituted what Reaganites described as trickle down supply side economics, there has been a dramatic change in the relative prosperity of the middle class and the small group of very wealthy individuals who have been the primary beneficiaries of Republican economic policies. The statistics listed here clearly indicate that very little of the fruits of the economic expansion have “trickled down” to the middle class. From 1980 to the present, the fortunes of the wealthiest 1% of American have grown dramatically in both assets and income to a point that has been unmatched in this country since the age of the robber barons in the early 1900’s.

Over the 25 year period from 1980 to 2005 the median family income has increased by 18 percent. During the same period the income of this country’s wealthiest individuals has gone up 200 per cent. The financial magazine, The Economist, reports that in the United States “the gap between rich and poor is bigger than in any other advanced country.

In 1980 the income of the average CEO of an American Corporation was forty-two times the average blue collar worker’s pay. Twenty-five years later the average CEO’s compensation had climbed astronomically to 431 times the average worker’s pay.

CEO compensation increased 340 percent from 1992 to 2002, while the average employee’s pay increased only 36 percent, barely enough to keep up with inflation.

Lee Raymond, the former chairman of Exxon/Mobil, in testimony before congress declared that “we are all in this together, all over the world,” and that the drastic increase in the price of oil was due purely to supply and demand forces. We would all like be in it together with Mr. Raymond whose compensation during his tenure as chairman of Exxon/Mobil worked out to be $144,573 per day. It is fair to ask what concern does someone who is making $143,573 per day have for the severe economic problems of the average citizen that escalating oil prices have created. The Lee Raymond’s of this country are the chief beneficiaries of rising oil prices, accumulating vast wealth while the rest of humanity suffers.

During the first five years of the 21st century, it is estimated that the United States lost more than three million manufacturing jobs. Much of this loss was attributable to misguided “free trade” policies and agreements such as NAFTA that were supported by our government. In addition, many high paying jobs were outsourced to foreign countries such as India and China where large multi-national corporations could exploit cheap labor at the expense of the American worker.

According to the Pew Research Center, 59 % of workers polled believe that it’s harder to earn a decent living today than it was 20 or 30 years ago. Despite claims by big business and Wall Street concerning the benefits of globalization and unrestricted free trade, American workers can recognize the reality on main street of a rapidly declining standard of living for the average citizen.

Economist Emmanuel Saez of the University of California calculated that, even excluding capital gains, that 75% of the pre tax income growth in the so-called Bush expansion (2002-2006) went to the richest 1% of American families versus only 46% in the Clinton expansion (1993-2000). Clearly Republican economic and tax policies have had the effect of enhancing the income of the wealthiest Americans at the expense of the shrinking middle class.

Texas multi-millionaire Bernard Rapoport recently commented “I certainly don’t think that there is anything wrong in making money the right way. But when 1 percent of the population has more assets than the bottom 99 percent in a country of almost 300 million people – this means that 30,000 so-called capitalists have more combined wealth than the bottom 100 million people in these United States – there’s something wrong!”

Since 1979 real inflation adjusted hourly wages for most workers have increased by only 1% during a period when the average worker’s productivity increased 60%.

It is obvious that the long term trend for the economic well being of the average American family is in serious decline. The Democratic Party is sensitive to the severe financial squeeze that the middle class is experiencing. We do not believe that this is a nation of “whiners” as ex Republican Senator, Phil Gramm, recently claimed. We believe that the Bush tax cuts which primarily benefit the wealthiest segment of our society need to be eliminated and replaced with a tax plan that benefits the beleaguered middle class. So called “free trade” agreements that eliminate and export good high paying jobs in this country need to be reevaluated. Our trade laws and tax policies need to discourage and penalize mult-national corporations who outsource jobs to low paying third world countries. Average Americans should finally begin to realize that their best interests are not served by the Republican party. We need to wake up now before it is too late to save our rapidly disappearing middle class.